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Bloomberg's Matt Levine has an interesting take: > Here’s another thing about being a private company. What if this had worked? What if Goldman hadn’t noticed anything unusual and had coughed up the $40 million? Wouldn’t Goldman have been embarrassed when this story came out? Well, no, because this story never would have come out! Even if someone had told Goldman after the fact “hey that call with YouTube was fake,” what would they have done about it? They could call Ozy and demand their money back but presumably Ozy spent it. They could sue, but how much would they be able to recover? Once you’ve been tricked into investing in a high-flying startup, the only rational move is to hope that they succeed, clean up their act and go public at a higher valuation. You’d never go around saying “we were tricked”; that just destroys value. > Similarly, if you are an investor and board member of a hot startup, and you find out that the co-founder impersonated a customer to try to trick someone into investing, what are your incentives? If you make a big deal about it and throw around words like “fraud,” it will be hard for the startup ever to raise money again, which might make your own investment worthless. If you say, meh, unfortunate one-time event, no harm no foul, then maybe the company’s vision will end up working out and you’ll be able to sell at a profit. If you invest in a startup you are buying an option; your goal, as a board member, is not to extinguish the option value too soon. Just, you know, let it ride, see where this goes. https://www.bloomberg.com/opinion/articles/2021-09-27/impost... |